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September 27, 1996     Cape Gazette
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September 27, 1996

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C.'dE GAZE', lidaF,.Sbet . Oetobet 8) te96; 45, BUS00NESS & REAL ESTATE ......... Archivist tells Milton Main Street to promote through history By Kerry Kester Commerce of Milton that it con- Russ McCabe, state archivist, sider promoting the town's histo- recommended to the Chamber of ry as a means of furthering eco- Rehoboth Main Street attracting members Rehoboth Main Street President Kathy Kramedas (right) welcomes the 60 or so people who gathered Sept. 23 at Victo- ria's in the Boardwalk Plaza, as she encouraged members of the business community to join and become involved in the various committees. Shown with her are (l-r) Anne Marie Burnell, Main Street executive director;, Burnell's husband Dave, and grandmother Laura DelleDonne. The Main Street board of directors will hold its next meeting at 5:15 p.m., Wednesday, Oct. 2 in the offices at city hall (former meter department). The agenda includes a report on a Main Street kick-off meeting in Dover, upcoming March of Dimes walk, information kiosk update and upcoming signs and lights technical visit from National Main Street. Old business will include a review of proposed ordinance revisions and a pro- posed pledge which merchants would be asked to sign promising not to park in front of commercial establishments. nomic development when he spoke to the group on Wednesday, Sept. 18. McCabe suggested the chamber con- sider capital- izing on the town's histo- ry as a ship- building community in the 1700s to appeal to tourists inter- ested in his- MCCABE tory. "More and more people who are coming to Delaware are coming not for the beaches, but for what we promote," said McCabe. The tourist industry, he said, is not one-dimensional. Historical attractions are equally appealing for many travelers and vacation- ers. It was during the 1680s that set- tlement in Milton began to increase, said McCabe. The moti- vation for the development, he said, was greed. "Everything was transported by water," he said, so land with water access was premi- um property and was avidly sought. In the early 1700s, the economy started to change from subsistence to profit based, with the primary commodities being grain and tim- ber. As time went on and. the economy strengthened, a trend developed toward moving toward the center of what is now Milton. By the 1720s, he said, a physical landing was established for ships, and the town began to take shape. At about the time the landing was developed, there was a scarcity of ships, McCabe said, so an effort began to build the ships needed to transport the grain produced and milled in the area. "By the 1720s, things were booming," he said. Various set- tiers began capitalizing on various economic and geographical situa- tions in the area. One man - George Conwell - was particularly important in Milton's develop- ment, said McCabe. "He physically began to break up the area - into lots - that is now the business section of Milton," he said. Conwell, however, was of questionable character, said McCabe. The story, he said, "involves the kind of intrigue we typically associate with the 20th century. If you're interested in some spicy stuff...he was quite the wheeler dealer." Ultimately, Conwell was largely responsible for the manner in which Milton developed for the next several decades. "By the ear- ly 1800s, Milton was a community as we come to think of a commu- nity today," said McCabe, and at about that time, a sudden interest in Milton products developed. 'q'he economy began to diversi- fy," said McCabe. Vessels started to be built and built to be sold elsewhere, he explained, and "between 1825 and 1880 there were over 400 vessels that were documented to have been built in Milton. Milton was a major eco- nomic boom town. It was super prominent then." Then by the 1880s, the ship- building industry died, he said, and with it the overall economy died. Lots of the people from the community moved away at that time, said McCabe. "At the very least, we need a state historical marker that talks about the town's shipbuilding his- tory," said MeCabe, as he explained his historical promotion concept to the chamber members. He also recommended the town Continued on page 47 Tax cut bill makes retirement plans simple As part of its legislation increas- ing the national minimum wage from the current $4.25 an hour to $5.15 an hour, Congress recently passed a package of measures that include a number of small-busi- ness tax cuts. The bill was signed into law on Aug. 20. The tax cuts are a boon to small businesses in many ways. Includ- ed in the bill are provisions that will: Allow small businesses to take annual tax deductions of up to $25,000 for the cost of new equip- ment in the year of purchase, up from the current limit of $17,500. Offer tax credits for employers who hire welfare recipients and youth from low-income families. Loosen requirements for form- ing subchapter S corporations, a structure often used by small and family owned businesses. Perhaps the most important pro- vision, however, is the creation of a new type of retirement plan, one having less extensive require- ments than current Salary Reduc- tion Simplified Pension (SARSEP) plans and 401(k) sav- ings plans Under the new law, which takes effect Jan. 1, 1997, many employers will find it easier to offer their employees a retire- ment saving plan. The tax bill permits small busi- nesses to adopt a new form of retirement plan called a "Savings Incentive Match Plan for Employ- ees" (SIMPLE) plan. A SIMPLE plan can be funded either through Individual Retirement Accounts for each employee or as part of a 401 (k) plan. Generally, employers with 100 or fewer eligible employees for the preceding year that have no other qualified plans would be eli- gible to adopt a SIMPLE plan and make contributions to SIMPLE accounts. Previously, SARSEPS, were available for employers with just 25 or fewer employees. SIMPLE plans would be free of some of the complex compliance rules now required for a plan to qualify for tax advantages, specif- ically the nondiscrimination rules and testing requirements that are meant to ensure that retirement plans do not favor a company's highly paid employees. The new plans would be exempt from these FINANCIAL FOCUS rules as long as employer contri- butions are made from one of these two different formulas: Matching contribution formu- la. The employer matches employee elective contributions dollar-for-dollar up to 3 percent of the employee's compensation. The employer is allowed to elect a lower percentage matching contri- bution for all employees of no less than 1 percent of each employee's compensation of up to two of the immediately preceding five years provided it notifies employees of this election. Non-elective contribution for- mula. Alternatively, the employer can make contributions of 2 per- cent of each eligible employee's compensation, up to $150,000. Another rule changed by the SIM- PLE legislation is requirement of a minimum employee participa- tion level. In contrast to a SARSEP, which requires 50 per- cent of all eligible employees to participate, a SIMPLE plan has no required minimum participation level. Employee eligibility rules have also been eased for the SIMPLE plans. ,Under a SEP plan, employ- ers can require eligible employees to be at least age 21, work for the employer at least three out of the immediately preceding five years and receive $400 in compensation during the plan year. Under the SIMPLE plan, employees become eligible to participate after having earned at least $5,000 a year in any two preceding years and if they are reasonably expected to earn at least $5,000 in the current year. The law permits SIMPLE plan participants to contribute an elec- tive deferral of up to $6,000 annu- ally. This limit is lower than the current $9,500 annual elective maximum. Combined with a matching employer contribution of $6,000, the maximum contribu- tion allowable for 1996 for each employee would be $12,000. Cur- rently, the law provides for an overall yearly maximum contribu- tion limit of 15 percent of com- pensation, up to $22,500 a year. Contributions to a SIMPLE plan generally are tax deductible by the employer for the year in which they made and are excludable from an employee's taxable income. The contributions and any earnings in a SIMPLE account generally are tax deferred until withdrawn. In an effort to encourage employees to save their accounts for retirement, early withdrawal penalties from a SIMPLE/IRA are steeper than current law mandates. Withdrawals within two years from the date the employee first participated in the SIMPLE/IRA plan are subject to a 25 percent premature distribution penalty. After two years, the standard 10 percent premature distribution penalty will be applied, the same penalty that applies to current retirement plans. The higher penalty does not apply to early distributions from a SIMPLE 401(k) plan. Significantly, the legislation also allows the nonprofit market to become eligible to offer 401(k) plans. This provides new opportu- nities for hospitals and other non- profit foundations and associa- tions to offer retirement plans to their employees. While many employers will want to take advantage of the new SIMPLE plans, you can still set up a plan that will be governed by current law. SEP plans without the salary deferral feature will contin- ue to be available and SARSEP plans can still be established before Jan. 1 1997. If you want to offer your employees the higher level of tax deductible contributions allowed by current law under a SARSEP plan - $9,500 for 1996, rather than the new annual limit of $6,000 - you should talk with your finan- cial advisor about establishing a SARSEP plan by the end of 1996. As these new rules are put into effect, take this opportunity to review your current retirement benefits, as well as other ways your business might benefit from this legislation. Daniel Tidwell is vice president and resident manager for Merrill Lynch of Rehoboth Beach. Daniel Tidwell